Reference no: EM131440982

Background:

Talent is the key to winning! Whether setting cost targets for product development, allocating funding to the sales force, performing due diligence or redefining a company's strategic plan, people make it happen. But, according to Business Week, the robust U.S. economy continues to drive a record low national unemployment rate (ranging from 3.9 percent to 4.1 percent) and a record high percent-age of employed Americans (currently around 65 percent).1 Employers are having unprecedented difficulty filling open positions, let alone finding and retaining high-potential talent. The squeeze will intensify as the need for talent among traditional companies competes with new demands from Internet and high technology firms. According to a study by William M. Mercer Companies LLC, the shrinking talent pool is one of the top five global business concerns among both line and human resource executives.2 To be successful, your company needs to attract and develop talented employees who can achieve high performance and productivity. More importantly, you must keep you valued employees committed to and focused on the company's goals through appropriate compensation and by using various retention tools. The following represents recommendations on how to successfully retain your valued employees. Build a Solid Foundation The foundation for a successful retention program is successful recruiting. Successful recruiting requires that you know your company's culture and its human resource needs. First, analyze your company's organizational competence, its collective individual talent and its strategic direction. Use that information to identify gaps that must be filled with new recruits. For example, if a company's strategy is to acquire high-growth, niche players in its industry but it lacks prior experience, recruitment efforts should focus on hiring financial professionals with due diligence and related merger and acquisition skills. Before holding interviews, prepare a carefully defined job description including major responsibilities, required skills and other expectations. Then, during the interview, probe deeply into the candidate's background for specific examples and experiences to ensure that he or she is technically qualified. For example, a candidate may indicate on her resume that she was controller for a major systems project. Upon closer scrutiny, however, she may clarify that her sole responsibility was to process invoices and summarize financial results reported by the corporate controlling group. In addition to having the proper skill-sets, make sure the candidate is a good fit in terms of personality, work ethic and general business acumen. Many companies use a cross-functional team to interview candidates for a critical position. For example, when recruiting for a brand finance director, the human resources team can assess personality, peers in brand finance can assess work ethic, brand marketers can assess general business acumen and the CFO can assess promotability. In addition, you could use group interviews or formal personality assessments to identify the necessary traits. Finally, you should allow recruits to assess their own fit by providing them with realistic expectations about workload, responsibilities, corporate culture and potential organizational changes. For example, the brand finance candidate should know if 70-hour weeks are the norm and/or if the brand will likely be divested in a few months. Once a candidate has been hired, the first few months are critical. When companies "hire managers from [the] external market, all too often the corporate 'immune' system attacks them."' Current employees who are jealous or resistant to change will often undermine a new hire's authority. To increase acceptance of new hires, you should clearly define role expectations, facilitate the building of peer and subordinate relationships and facilitate development of political savvy. One recent trend in employee orientation is "on-- boarding," a two-month process that gradually and methodically introduces new hires to the company in four phases.4 During the first two phases, the new hire focuses on establishing a personal network within the company and gaining familiarity with operations through training, rotations and shadowing experiences. During the final two phases, the new hire gradually assumes his or her responsibilities, first synthesizing what was learned and then applying this new knowledge. Develop An Early Warning System As competition for high-potential talent intensifies, companies must go beyond simply recognizing that their employees are important assets. They must also develop an early warning system to identify those at risk of leaving. If your company tracks retention statistics in the aggregate only, however, you may not recognize a potential problem. Significant retention problems within a particular sub-group (e.g., 25 percent turnover among recent MBA hires) may be hidden by positive aggregate trends (e.g., company-wide turnover of only five percent). By analyzing retention data for subgroups based on ethnicity, gender, geography, function, organizational level, current performance, assessed potential, etc., you can easily identify at-risk groups. After identifying that a sub-group has high rates of defection, you need to determine what is driving the exodus. Valuable sources of information include employee surveys, employee reviews, mentor or manager feedback, local economic trends and headhunter activity. In addition, one of the most logical, but often untapped, sources of data is the exit interview. To make exit interviews more insightful, probe to determine the root cause behind an employee's departure so that appropriate corrective action can be taken. For example, an employee may initially state that his reason for leaving is lack of career opportunity. Upon further discussion, however, the employee may clarify that his supervisor blocked several transfers and/or promotions for fear that the employee's loss would negatively affect the supervisor's own performance. Design A Top-Notch Compensation Program Armed with knowledge about which groups of your employees are most at risk, you can intervene before they leave. The challenge is to design a compensation program that rewards your valued employees without encouraging unproductive workers to remain. Here are some suggestions: Compensation - In order to maintain valued employees, their salaries should be competitive with or exceed local market and/or industry averages. Although salary is key, the importance of performance-based bonuses (cash awards, equity incentives and stock options) and other traditional benefits (health care and retirement plans) should not be underestimated. Empowerment - Although compensation is critical, employees rated it behind "chance to use skills on job" and "trust in senior leadership" as the key drivers behind their company loyalty.' Empowerment entails encouraging employee risk-taking and avoiding micro-management. It is defining clear expectations with measurable goals and then emphasizing individual responsibility and accountability. Empowerment also includes taking time to celebrate accomplishments, provide constructive feedback and agree upon new priorities. Career Opportunity, Development and Growth - Give your employees the tools they need to develop and succeed, and reward them for their excellence. Encourage employees to participate in development and training programs or offer them tuition reimbursement to earn a higher degree consistent with their career goals. In addition, offer them a formal mentoring program, giving them an advocate, a sounding board for ideas or concerns, an enhanced network and access to the company's internal expertise. Finally, make sure that valued employees have well defined career paths and are promoted in a timely fashion. Work-Life Balance - Many are struggling to find a balance between their career and their personal life. Companies that support their valued employees in this quest will be rewarded with higher retention. To encourage balance, offer flextime, compressed time, floating holidays, vacation carry-over, job-sharing or part-time work. In addition, you could offer day care services or an on-site fitness center. Finally, reward employees by allowing them to bring their significant other on business trips, to company dinners or to other corporate functions. Communication - One of the most cost effective retention tools is communication. Being kept informed about the company's vision, strategic plans, financial results, recent acquisitions and other important issues can be very motivational. Good communication begins during a new hire's orientation when conditions of employment, benefits, key policies and job responsibilities are discussed. Throughout their careers, employees want timely feedback and reviews, insight into their career path options, the chance to learn from peers and mentors, and opportunities to build their network. lo, Other Creative Measures - Most companies cannot afford to offer employees everything, but there are many creative ideas that could make the difference in enticing potential hires to join or valued employees to stay. For example, some companies offer wardrobe allowances to recent graduates in addition to signing bonuses, which are now considered mandatory. Some assist first-time homebuyers in making their down payment and help those working aroundthe-clock by offering maid and concierge services. Many other companies have business casual Fridays or allow business casual dress every day. Finally, recognize valued employees with awards, special premiums or tickets to sporting events. Conclusion The pool of high-performance talent is shrinking while the demand for this talent is increasing. Retaining your valued employees will likely become a prerequisite for corporate survival. The foundation for a successful retention program begins with recruitment, hiring individuals with the right skills, personality and work ethic and then giving those new hires the opportunity to succeed during their critical first months. Building on this solid foundation, you should carefully track the high-- performers, looking for early warning signs that often lead to defection. Finally, give your most valued employees the best opportunities, coaching and rewards, knowing that the key to your company's success is their retention.

Question: Retaining valued employees

What would be the summary of the entire article list above in one's own words?